REPORT: Latin American Economic Outlook 2017 Youth, Skills and Entrepreneurship, Nov 2016
The Latin American Economic Outlook 2017 analyses the attitudes, challenges and opportunities of Latin America’s youth. Youth in Latin America and the Caribbean (LAC) aged 15 to 29 number more than 163 million – around a quarter of the region’s total population. The region’s once promising economy is now slowing down, challenging the social, political and economic progress of the last decade. As such, young people stand at a crossroads, embodying the region’s promise and perils.
Social and economic progress of the last decades raised expectations, which have not been fulfilled. In recent decades, public policies became more inclusive and long-time neglected sectors began participating in society. The middle class reached 35% of Latin America’s population, growing by 14 percentage points in the last decade. Yet inclusion of youth in the region remains unfinished. As many as 64% of young Latin Americans live in poor or vulnerable households and have been unable to enter the consolidated middle class. Ideally, access to quality education and health services, as well as civic engagement, all set the stage for youth to take part in labour markets and productive activities. In practice, however, many young people in Latin America are cut off from these opportunities. The sharp disconnection between expectations and demands and actual outcomes is fuelling social dissatisfaction and weakening trust in democratic institutions. As a result, only one out of three young people express confidence in elections.
Most youth leave school for inactivity or informal jobs. One-fifth of the 163 million youth living in Latin America work in informal jobs, and another fifth are neither working nor engaged in education or training (NEET). This situation is prevalent among the most disadvantaged. Youth from poor and vulnerable households leave school earlier than their peers in better-off households, and when employed they mainly work in informal jobs. At age 15, almost 70% of youth living in poor households are in school, but at age 29, almost three out of ten young people are NEETs, another four work in the informal sector, only two work in the formal sector and the remainder are either working students or students.
The recent expansion of education coverage has to be coupled with stronger links with the labour market. Despite remarkable progress in education during the last decade, less than one-third of young Latin Americans aged 25 to 29 have received some education at college, university or a higher level technical school. Many young Latin Americans leave school too early: as a result, a third – 43 million – have not completed secondary education and are not enrolled in school. Moreover, technical and vocational education rarely train youth in pertinent, high-level trade, technical, professional and management skills. In fact, the LAC region exhibits the widest gap in the world between the available pool of skills and those demanded by firms. This creates a challenge for the region in transitioning into a knowledge-based economy, where citizens need to innovate, adapt and leverage advanced human capital.
Investing in youth’s skills is key to igniting endogenous engines of growth and building a solid basis for future progress. Improving the skills of Latin American youth involves strengthening the education system and promoting lifelong and comprehensive skills policies. Education curricula and skills-enhancing programmes should provide youth with technical training for productive inclusion, as well as foundational skills.
These are critical throughout people’s lives, making them better able to switch jobs and adapt to changing external conditions. Evaluations of skills-enhancing programmes for youth in LAC show that combining classroom with workplace learning of both soft and technical skills and job search services improves the prospects of youth for quality jobs.